Wednesday, April 13, 2005

China Government Squeezes Foreign Software Companies

Fascism is a philosophy or system of government that is marked by stringent social and economic control, a strong, centralized government usually headed by a dictator, and often a policy of belligerent nationalism. Nazi Germany and Italy under Mussolini were fascist. The People's Republic of China fits the definition in today's world.

The Financial Times (registration) reports that Chinese government agencies are strongly encouraged to buy software from local developers -- or foreign firms that must train local staff, invest revenues back into China and "transfer core software technology to China".

The "buy local or else" mandate comes a year after Microsoft won some local contracts in spite of national-level attempts to steer the business to local firms.

This is a helluva club to wield, especially given the virtually total disregard in China for intellectual property rights such as paying for software. Any foreign software firm that buys into these draconian Chinese government terms for some short-term revenue -- and with the hope of future China market share -- is making a pact with the devil. A pity that many software firms will ignore my warning.

Peter S. Kastner

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